The dismissal of employees who have reached and worked beyond the normal retirement age has been found to be fair, says Werksmans Attorneys.<\/p>\n
Employers do not waive their rights to enforce the normal retirement age by serving salary adjustment letters after their employees reach the normal age of retirement.<\/p>\n
Facts<\/strong><\/p>\n This was the issue considered by the Labour Court\u00a0(“LC”)\u00a0in the case of\u00a0Solidarity obo\u00a0Gerhardus\u00a0Viljoen Strydom & 5 others \/ State Information Technology Agency Soc Ltd.<\/p>\n In this matter, the\u00a0employment contract of the employees provided that their retirement ages would be regulated by their relevant pension fund rules.<\/p>\n The pension fund rules provided that, subject to the employer’s consent, an employee who reached the normal retirement age of 60, “may remain in service and retire at a date not later than the last day of the month in which the member attains the age of 67”.<\/p>\n In short, members of the pension fund were permitted to remain in service beyond the normal retirement age but no later than the age of 67 years.<\/p>\n After the\u00a0employer\u00a0had allowed the\u00a0employees\u00a0to work beyond the normal retirement age, the\u00a0employer enforced the normal retirement age and served the employees with retirement notices. The notices informed the employees that they had reached their retirement age and as a result,\u00a0their employment contracts would terminate.<\/p>\n The employees lodged grievances challenging the company’s decision to enforce the retirement age.<\/p>\n The employees\u00a0argued that the employer had consented\u00a0to the\u00a0employees\u00a0remaining in\u00a0service beyond the normal retirement age.\u00a0In support of this contention, the employees relied on the letters the employer served on the employees which communicated the decision to approve annual salary increases.<\/p>\n The employees argued that the letters constituted tacit consent to allow the employees to remain in service beyond the normal retirement age. These letters were issued after the employees reached the normal retirement age.<\/p>\n In contrast, the employer contended that the employees’ employment automatically came to an end when they reached the retirement age of 60 years, as stipulated in their contracts of employment.\u00a0Furthermore, the employer contended that there had been no written amendment to provide a termination date beyond the normal retirement age of 60.<\/p>\n Labour Court (“LC”) Findings\u00a0<\/strong><\/p>\n The LC found that the employer’s contention that the contracts of employment automatically terminated when they reached the normal retirement age had no merit\u00a0as the employees had continued to render services.<\/p>\n The LC found that the employees’ contention that the salary adjustment letters constituted consent to extend the retirement age to 67\u00a0(“agreed retirement age”)\u00a0had been “a bit of a stretch”.<\/p>\n The LC found that the scope of the letter had been limited to the amendment of the employees’ salaries and nothing more. The LC affirmed that the normal\u00a0 The\u00a0LC\u00a0further\u00a0relied on, amongst others,\u00a0Bank\u00a0v\u00a0Finkelstein t\/a Finkelstein and Associates\u00a0(JS219\/15) [2016]\u00a0ZALCJHB\u00a0428\u00a0(“ Similarly, the LC relied on\u00a0Kumta\u00a0and Others\u00a0v\u00a0Limpopo Legislature\u00a0(JS886\/09) [2014]\u00a0ZALCJHB\u00a0357\u00a0(“Kumta”)\u00a0 The\u00a0Finkelstein\u00a0 The LC found that the normal\u00a0retirement\u00a0age remained “uninterrupted and binding”.\u00a0The dismissal of the employees had therefore been fair.<\/p>\n Importance of case<\/strong><\/p>\n The case reaffirms\u00a0that if\u00a0there is no agreement on the retirement date once the employee reaches the normal retirement age, then the employer is entitled to enforce the normal retirement age at any time thereafter.<\/p>\n